SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31,June 30, 2011 Commission File No. 001-10156
ORIGINAL SIXTEEN TO ONE MINE, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-0735390
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporated or organization)
Post Office Box 909, Alleghany, CA 95910
(Address of principal executive offices)
(530) 287-3223
(Registrant's telephone number)
(including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days.
Yes: No: Xx
As of March 31,June 30, 2011, 13,399,505 shares of Common Stock, par value $.03 per
share, were issued and outstanding.
PART I
1. FINANCIAL INFORMATION
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet
March 31,June 30, 2011 and December 31, 2010
March 31,June 30, 2011 December 31, 2010
ASSETS
Current Assets
Cash $ 011,726 $ 4,956
Accounts receivable 2,9072,837 3,597
Inventory 371,695382,289 372,199
---------- ----------
Total current assets 374,602396,852 380,752
---------- ----------
Mining Property
Real estate and property rights
net of depletion of $524,145 230,401 230,401
Real estate and mineral property 47,976 47,976
---------- ----------
278,377 278,377
---------- ----------
Fixed Assets at Cost
Equipment 810,404 810,404
Buildings 209,487 209,487
Vehicles 105,414 105,414
---------- ----------
1,125,305 1,125,305
Less accumulated depreciation (1,058,233)(1,061,108) (1,055,357)
---------- ----------
Net fixed assets 67,07264,197 69,948
---------- ----------
Other Assets
Bonds and misc. deposits 5,460 7,962
---------- ----------
Total Assets $ 725,511744,886 $ 737,039
========== ==========
Original Sixteen to One Mine, Inc.
Condensed Balance Sheet continued
June 30, 2011 and December 31, 2010
June 30, 2011 December 31, 2010
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable &
accrued expenses 834,360805,094 817,497
Due to related party 314,220388,363 304,848
Notes payable due within one year - -
---------- ----------
Total Current Liabilities 1,148,5801,193,457 1,122,345
---------- ----------
Long Term Liabilities
Notes payable due after one year 97,236 97,236
---------- ----------
Total Liabilities 1,245,8161,290,693 1,219,581
---------- ----------
Stockholders' Equity
Capital stock, par value $.03:
30,000,000 shares authorized:
13,399,505 shares issued and
outstanding as of March 31, 2011June 30, 2010 and
13,373,505 as of December 31, 20102009 440,656 440,656
Additional paid-in capital 2,063,202 2,063,202
(Accumulated deficit)
retained earnings (3,024,163)(3,049,665) (2,986,400)
---------- ----------
Total Stockholders' Equity (520,305)(545,807) (482,542)
---------- ----------
Total Liabilities and
Stockholders' Equity $ 725,511 $ 737,039$744,886 $737,039
========== ==========
See Accompanying Notes
Original Sixteen to One Mine, Inc.
Statement of Operations and Retained Earnings
Three Months Ended March 31, 2011 and March 31, 2010
ThreeEnding June 30, Six Months Ending March 31,June 30,
2011 2010 2011 2010
------ ------ ------ -----
Revenues:
Gold & jewelry sales $ 56,87288,480 $ 11,06752,106 $ 121,798 $ 63,174
----------- ----------- -------- --------
Total revenues 56,872 11,06788,480 52,106 121,798 63,174
----------- ----------- -------- --------
Operating expenses:
Salaries and wages 26,470 11,17016,210 74,394 42,778 84,935
Contract Labor 11,622 8,79212,316 14,026 23,938 22,819
Telephone & utilities 15,603 11,64516,702 24,475 32,305 36,119
Taxes - property & payroll 6,362 10,2974,761 10,930 11,026 20,827
Insurance 2,972 277190 13,513 3,163 14,546
Supplies 3,648 23,44112,540 24,750 16,188 48,191
Small equipment & repairs 1,850 1,4513,685 4,540 5,536 5,991
Drayage 4,240 7,6126,172 7,013 10,412 14,898
Corporate expenses 1,500 1,1504,889 5,947 6,389 7,097
Legal and accounting 7,145 3,5982,852 534 9,997 4,132
Mine Maintenance 21,199 64 29,450 10,528
Depreciation & amortization 2,876 4,354 5,752 8,707
Other expenses 9,634 19,4001,734 1,866 3,113 10,804
---------- ---------- ------- -------
Total operating expenses 93,922 103,187106,126 186,406 200,047 289,594
---------- ---------- Profit (Loss)-------- --------
Loss from operations (37,050) (92,120)(17,646) (134,300) $ (78,249) $ (226,420)
Other Income & Expenses:(Expense):
Other Income 5,797 282,071
Other Expenses (6,510) (3,691)income (expense) (7,057) 2,412 15,784 280,791
---------- ----------- ------- --------
Total Other Income (Expense) (713) 278,380
---------- -----------
Profit (Loss) before taxes (37,763) 186,260(24,703) (131,888) (62,465) 54,371
---------- ----------- --------- ----------
Income Tax Benefittax benefit (expense) (800) - 800(800) (800)
---------- ----------- --------- ----------
Net Profit (Loss)profit (loss) $ (37,763)(25,503) $ 185,460(131,888) $ (63,265) $ 53,571
============ =========== ========== ==========
Basic and diluted (loss)
Gain
(Loss) per share $ (.003)(.002) $ .013(.01) $ (.005) $ .004
============ ============ ========= =========
Shares used in the
calculation of net
loss income per share 13,399,505 13,373,50513,399,505 13,399,505 13,399,505
============ =========== ========== ===========
See Accompanying Notes
Original Sixteen to One Mine, Inc.
Statement of Cash Flows
ThreeSix Months Ended March 31, 2011June 30,2011 and March 31, 2010
ThreeJune 30,2010
Six Months Ended March 31,June 30,
2011 2010
-------------- --------------
Cash Flows From Operating Activities:
Net (loss) profit (loss) $ (37,763)(63,265) $ 185,46053,571
operating activities:
Depreciation and amortization 2,876 4,3545,752 8,707
(Increase)Decrease in
accounts receivable 690 (1,340)760 (1,351)
Decrease(Increase) in inventory 504 (2,350)(10,090) (14,814)
(Increase)Decrease in other
current assets - -
(Decrease) increase in accounts payable
and accrued expenses 16,863 (50,217)(12,403) 28,653
(Decrease) increase in short term notes 9,372 (430,338)83,515 (433,307)
------------ ----------
Net cash (used) provided by
operating activities (7,458) (294,431)4,269 (358,541)
------------ -----------
Cash Flows From Investing Activities:
Sale of Real Estatemining property - 300,000
Mining Claim fees, capitalizedCapitalization of mining claims - (2,646)
(Increase) Decrease Bonds, Misc Deposits 2,502Other assets bonds misc. deposits 2,501 (2,502)
------------- -----------
Net cash (used) providedused by
investing activities 2,5022,501 294,852
------------- -----------
Cash Flows From Financing Activities
Increase (decrease) notes payable - -
(Increase) decrease in notes receivable - -
Proceeds from sale of common stock - -780
Additional paid-in capital - -57,920
------------ ------------
Net cash provided (used) by
financing activities - -58,700
------------ ------------
(Decrease) increase in cash (4,956) 4216,770 (4,989)
Cash, beginning of period 4,956 7,321
------------ ----------
Cash, end of period $ 011,726 $ 7,7422,332
============ ============
Supplemental schedule of other cash flows:
Cash paid during the period for:
Interest expense $ 6,36314,744 $ 3,4085,058
============ ============
Income Taxestaxes $ -800 $ -800
============ ============
See Accompanying Notes
NOTES TO THE FINANCIAL STATEMENTS
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business: Original Sixteen to One Mine, Inc. (the Company) was
incorporated in 1911 and is actively involved in operating gold mines in
Alleghany, California; currently, in maintenance status.
Inventory: Inventory consists of gold bullion, specimens and jewelry. Gold
bullion and specimens are quoted at the market price for gold bullion.
Jewelry is quoted at the market price for the gold content plus labor cost.
Gold bullion isand jewelry are accounted for using the FIFO method. All other
inventory is accounted for using the specific identification method.
Fixed Assets: Fixed assets are stated at historical cost. Depreciation is
calculated using straight-line and accelerated methods over the following
useful lives: Vehicles 3 to 5 years, Equipment 5 to 7 years, Buildings 18 to
31.5 years.
Depletion Policy: Because of the geological formation in the Alleghany Mining
District, estimates of ore reserves currently cannot be calculated, and
accordingly, a cost per unit depletion factor cannot be determined. Should
estimates of ore reserves become available, the units of production method of
depletion will be used. Until such time, no depletion deduction will be
recorded.
Revenue Recognition: As they are mined, gold specimens are recorded in
inventory and revenue is recognized using quoted market prices for gold.
For income tax purposes revenues are not recognized until the gold is sold.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported amounts
of assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
GENERAL NOTES
1. In accordance with directive from the Securities and Exchange Commission
(SEC)and Industry Guide 7, reference for all intent and purposes to the
Company's employees as miners, its properties as mines or its operation as
mining does not diminish the fact that the Company has no proven reserves and
is in the "exploration state" as defined in Guide 7(a)(4)(iii).
2. In the opinion of management, the financial statements contain all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the Company's financial position at March 31,June 30, 2011 and December 31,
2010, the results of operations and cash flows for the three-month periods
ended March 31,June 30, 2011 and 2010. The unaudited financial statements have been
prepared in accordance with Generally Accepted Accounting Principles for
interim financial information and with the instructions to Form 10-Q and Item
310(b) of Regulation S-B.
II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
The Sixteen to One mine in the Alleghany Mining District is a unique mine and
requires a unique operation, which has been recognized by its owners, its
miners, geologists, engineers, and some public agencies during the last decade
of the twentieth century and to the present. It is a traditional high-grade,
hard rock, underground gold mine. The same company owns and operates
(maintains) the mine. Original Sixteen to One Mine Inc, (owner) was incorporated
in California in 1911. Experts estimate that less than twenty percent of the
proven and probable ore deposit has been mined. Production is approximately
1,500,000 ounces of gold.
There are over thirtytwenty-eight miles of horizontal workings and millions of cubic
feet of vertical excavations called stopes. The entire grounds are not
maintained for mining. Once an area is targeted for mining, travel ways and
escape routes are brought into safety compliance. Production miners set up a
heading (face) and begin a drill-blast-muck sequence into the quartz. Gold is
hosted in the quartz vein in exceedingly rich concentrations called "pockets".
Metal detectors are regularly used underground as a tool for guiding the
direction of the work. Metal detectors are also used as a tool to classifyseparate the
ore underground. This has the positive affect of reducing the volume of shot
rock
taken from the mine, thereby reducing costs.
In 1992, the company initiated a gold marketing plan of selling gold in quartz
as a gemstone. This produces revenue significantly greater than selling gold
into the spot market. Demand for the Sixteen to One gold-in-quartz gemstone
exceeds supply.
Production has been termed a "feast or famine" situation for over 100 years.
Reserves in a high-grade gold mine cannot be termed as "proven". The company
hoards gold and sells it according to short-term cash needs. This fact
requires an operator to manage its cash flow to operate between pockets. It is
difficult to undertake major expansion plans with an uncertain supply of
capital. The Company has announced general plans to build a new shaft in the
northern section of its Alleghany patented claims when fund are available.claims.
BALANCE SHEET COMPARISONS
For the three-monthsix-month period ending Marchfrom December 31, 2010 to June 30, 2011 there were no
significant changes to the balance sheet.
STATEMENT OF OPERATIONS
Revenues for the three-month period ending March 31,and six-month periods ended June 30, 2011 compared
to the same periods in 2010 increased by $45,805
(414%$36,374 (70%) and $58,624 (93%)
respectively. Primarily due to an increase in the spot price of gold.
Operating expenses for the three-month and six-month periods ended June 30,2011
decreased by $80,280 (43%) and $89,547 (31%) respectively compared withto the
same period forperiods in 2010 due to more salesas a result of inventory
and a higher gold pricedecreased maintenance activity in 2011.
ForOther income and expenses for the three-month period ended March 31,June 30, 2011
increased on the expense side by $9,469 (392%) due to higher interest expense
in 2011 compared to the same period in 2010 operating expenses did not change much overall. The increase in salaries2010. For the six-month period ended
June 30,2011 other income and expense decreased on the income side by $265,007
due primarily to the sale of $15,300 (137%) due to a crew on payroll for more time in the first quarter
of 2011 than 2010 was offset by the decrease in supplies of $19,793 (84%)Brown Bear Mine which was due to the purchase of suppliesbooked in 2010 for rehabilitation of the
1,000 foot level. The increase in legal and accounting of $3,372 (44%) due to
more legal fees in 2011 was offset by the decrease of $3,372 in drayage.2010.
For the three-month period ended March 31,June 30, 2011 compared to the same period in
2010 other income decreased by $276,274 (98%) due to the gain of $280,000 on
the sale of Brown Bear Mine in 2010. Other expenses increased by $2,820 (76%)
due to increased interest expense in 2011.
For the three-month period ended March 31, 2011 compared to the same period in
2010 the company showed a loss of
$37,763$25,503 compared to a gainloss of $185,460.$131,888 for the same period in 2010. The
decrease of $223,223 (120%$106,385 (80%) difference is attributabledue to the closingcombination of escrow onmore revenue and lower
expenses in 2011. For the six-month period ended June 30, 2011 the company
showed a loss of $63,265 compared to a profit of $53,571 for the same period in
2010. The $116,836 (218%) difference is primarily due to the sale of the Brown
Bear Mine in January 2010. See 2010 10-K for more information.
SUBSEQUENT EVENTS
Case 7068 complaint filed by the Company against Sierra County for damages
was settled on July 22, 2011.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity is substantially dependent upon the results of
operations. The Company maintains a gold inventory which it liquidates to
satisfy working capital needs. There is no assurance that inventory is
adequate to sustain the Company.
PART II
LEGAL PROCEEDINGS
In July 2009 the Company and its president were served a complaint for damages
in Superior Court of the State of California, County of Sierra by the
California Regional Water Quality Control Board, Central Valley Region.
On March 18,2011 the second, third and fourth causes of action were dismissed
leaving only the first cause of action; also, Michael Miller was dismissed as
a defendant in the case.Discovery is ongoing. The case number is: No. 7019.
On January 6, 2010, the California Department of Conservation, formally the
Division of Mines and Geology filed a complaint for statutory reporting and
mining fees and penalties alleging failures by the Company. Various Public
Resources Code Sections were cited substantially related to surface mining.
On March 24, 2010, the Company filed verified answers denying any wrongdoing.
Discovery is ongoing.
Case number 7097
On September 3, 20097068 complaint filed by the Company filed a complaint against Sierra County for damages
suffered due to a gasoline and diesel leak onto its property. Both
Sides seek settlement. Case number 7068.
SUBSEQUENT EVENTS
nonewas settled on July 22, 2011.
OTHER INFORMATION
The unaudited interim consolidated financial statements of Original Sixteen to
One Mine, Inc. (the Company) have been prepared by management in accordance
with generally accepted accounting practices. Such rules allow the omission of
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted audited accounting
principles as long as the statements are not misleading.
In the opinion of management, verified by signature below, all adjustments
necessary for a fair presentation of these interim statements have been
included. These adjustments are of a normal recurring nature.
The preparation of the Company's financial statements in conformity with
accounting principles accepted in the United States requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amounts of assets and liabilities and disclosure of contingent liabilities at
the date of the financial statements, as well as the reported amount of
revenues and expenses during the reporting period. On an ongoing basis,
management evaluates its estimates and assumptions; however, actual amounts
could differ from those based on such estimates and assumptions. No accounting
principle upon which the Company's financial status depends, requires estimates
of proven and probable reserves and/or assumptions of future gold prices.
Commodity prices may significantly affect the company's profitability and cash
flow. No independent accounting firm or auditors have any responsibility for
the accounting and written statements of the Form 10-Q.10-QSB.
The Company and its president assume responsibility for the accuracy of this
filing and certify the financial statements present fairly in all material
respects, the financial position of Original Sixteen to One Mine, Inc at March
31,June
30, 2011.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
From time to time the Original Sixteen to One Mine, Inc. (the Company), will
make written and oral forward-looking statements about matters that involve
risks and uncertainties that could cause actual results to differ materially
from projected results. Important factors that could cause actual results to
differ materially include, among others:
- Fluctuations in the market prices of gold
- General domestic and international economic and political
conditions
- Unexpected geological conditions or rock stability conditions
resulting in cave-ins, flooding, rock-bursts or rock slides
- Difficulties associated with managing complex operations in remote areas
- Unanticipated milling and other processing problems
- The speculative nature of mineral exploration
- Environmental risks
- Changes in laws and government regulations, including those
relating to taxes and the environment
- The availability and timing of receipt of necessary governmental
permits and approval relating to operations, expansion of operations,
and financing of operations
- Fluctuations in interest rates and other adverse financial market conditions
- Other unanticipated difficulties in obtaining necessary financing with
specifications or expectations
- Labor relations
- Accidents
- Unusual weather or operating conditions
- Force majeure events
- Other risk factors described from time to time in the Original Sixteen to One
Mine, Inc., filings with the Securities and Exchange Commission
Many of these factors are beyond the Company's ability to control or predict.
Investors are cautioned not to place undue reliance on forward-looking
statements. The Company disclaims any intent or obligation to update its
forward-looking statements, whether as a result of receiving new information,
the occurrence of future events or otherwise.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ORIGINAL SIXTEEN TO ONE MINE, INC.
(Registrant)
/s/Michael M. Miller
President and Director
Dated: May 25,2011November 29,2011